CJ CheilJedang Achieves Record High Performance... Nongshim Also Expected to Deliver Earnings Surprise
Convenience Food Investment and Overseas Business Bear Fruit Amid COVID-19 Crisis
[Asia Economy Reporter Lee Seon-ae] Amid the global economic crisis caused by the novel coronavirus disease (COVID-19) pandemic, domestic food companies have recorded their highest-ever performance. K-Food (Korean food wave) gained attention during the COVID-19 pandemic, achieving remarkable growth. It is evaluated that proactive investments such as anticipating food market trends, active overseas expansion, and strengthening the home meal replacement (HMR) business, which is a future food source, have borne fruit.
According to CJ CheilJedang on the 12th, second-quarter sales increased by 7.4% compared to the same period last year to 5.9209 trillion won, and operating profit grew by 119.5% to 384.9 billion won, setting a record high. As overseas business continued to grow, the global sales ratio exceeded 60% for the first time. This was thanks to Schwan's, which was once called the "winner's curse." When CJ acquired Schwan's, a U.S. frozen food production and distribution company, for 1.5 trillion won in November 2018, there were criticisms that the acquisition price was too high. It became a burden on the entire group, and eventually, CJ Group declared emergency management. However, CJ Group Chairman Lee Jae-hyun's proactive investment decision paid off amid the greatest crisis of COVID-19. In the second quarter, Schwan's U.S. sales amounted to 722.8 billion won, accounting for 68% of CJ CheilJedang's global food business sales.
Nongshim's U.S. subsidiary sales in the first half of this year (January to June) are expected to reach a record high of approximately $164 million, a 35% increase compared to the same period last year. Sales at major retailers Walmart and Costco increased by 35% and 51%, respectively, while sales on Amazon grew by 79%. Recently, the New York Times-operated product review site Wirecutter named Shin Ramyun Black as the most delicious ramen in the world. Shin Ramyun Noodle and Shin Ramyun Bowl ranked 6th and 8th, respectively. This surpassed Japanese and Chinese ramen, which had previously dominated the U.S. market.
This is the result of nearly half a century of knocking on the door of overseas markets. Nongshim has continuously invested in building overseas factories and strengthening product quality while focusing on marketing Korean ramen. Nongshim first exported ramen to Los Angeles (LA), U.S., in 1971 and has been targeting the U.S. market in earnest since operating the LA factory in 2005. With record-high overseas performance, expectations are high for Nongshim's performance report for the second quarter.
Orion and Dongwon Industries, which have already announced their earnings, also boasted earnings surprises with second-quarter operating profits increasing by 71% and 55.4%, respectively. Before the earnings announcements, Pulmuone, Daesang, Ottogi, and Samyang Foods are also expected to record double-digit growth rates in operating profit.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
